China meets London: UK starts first yuan money-market fund

The UK has become the first country in Europe to open a yuan-denominated money market fund, cutting out the middle man for investing in China.

The exchange-traded fund is listed on the London Stock Exchange,
with trading available in pounds, euro, and yuan, according to
the British government.

It allows investors direct access China's interbank lending
market, instead of going through an intermediary. China’s second
largest lender, China Construction Bank International, will be
home to the money-market fund, supported also by Britain’s HSBC
and Germany’s Commerzbank.

In 2014, the same bank was granted permission to process
transactions in yuan, making it more convenient for companies in
the UK to use the Chinese currency.

"The launch of this (fund) will provide further opportunities
for British and other global investors to invest directly into
China,” Andrea Leadsom, a junior British finance minister
said, as quoted by Reuters.

London, a global financial center rival to New York or Hong Kong,
has been courting China and its banks to start doing more
business in London with the yuan.

Last year Britain was the first country in the West to issue a
yuan-denominated bond.

China, the world’s second largest economy, has been pushing the
yuan as a rival to the dollar in the global financial system
since 2010. Last year, the Bank of China opened up yuan clearing
hubs in London and Frankfurt. As of January 2015, the yuan was
the fifth most-used currency in international payments. The next
obstacle for the yuan is becoming an IMF reserve currency.

Earlier this month, the UK became a founding member of the
China-led Asia Development Bank, the first major Western country
to support the project. France, Germany, Austria, Switzerland,
Luxembourg, and others quickly followed suit, ultimately forcing
the US to accept its emergence as a rival to the World Bank.